Companies House is accelerating strike-offs

If directors are late in filing their company accounts, and don’t reply to warnings from Companies House, their company can be struck-off the Companies House register and therefore cease to exist. (Companies Act 2006, s 1000.)

The time set aside to strike off an incorporated company if it is no longer carrying on business will be reduced. The new accelerated strike-off process seeks to obtain the balance between removing a defunct company and allowing any creditors sufficient time to file an objection.

Under previous legislation, if no objection was filed, a company was struck off in no less than three months following receipt of notice published in The Gazette. Under the new schedule, the company will be struck off in no fewer than two months from publication of the Gazette notice.

This measure will speed-up the process of deregistering a company name that has an active proposal to strike-off. However, if you’re trying to stop your company from being struck off, it is now even more important to keep your records up to date.

The Companies Registrar will send at least two formal letters to the company, and if no reply is received from any of the letters, it will then publish a notice in the Gazette to inform the world that the company will be struck off two months after the date of that notice.  This whole process is likely to take less than four month, reduced down from six months.

It has been common practice for HMRC to object to the Gazette notice and prevent the company from being struck-off if tax was due, or was likely to be due. This is necessary because HMRC cannot recover any tax due from the company once it has been struck-off, as then it has ceased to exist (HMRC Insolvency Manual INS5104).  Although it is our experience that HMRC are more regularly seeking to rely on Schedule 41 of the Finance Act 2008 which gives the ability for them to pursue the director personally in certain circumstances, see our associated article here.

HMRC’s objections to a striking-off can be frustrating for a director who is genuinely trying to close down a failed company but the HMRC procedure is needed to prevent the unscrupulous from trading through a UK company then allowing that company be struck off by ignoring Company House letters and then avoiding tax.

Companies House have indicated that they will not republish a first Gazette notice once a legitimate objection has expired.  If you previously relied upon a second notice before raising your objection Companies House now wish to make it clear that this will no longer happen. All objections need to be filed within the initial two month notice period.